What is Psychological Contract?

Psychological contract can be defined as the employee’s feeling of mutual commitments and responsibilities between himself and his employer (Rousseau, 1998). The employer’s interest and concern in the challenges faced by the employee and the support that offered in the areas related to work as well as non-work serves to create a long-term bonding between the employer and the employee. This motivates the employee to return this concern and interest through commitment, loyalty and diligence (Hobson et al., 2001). Psychological contract is also an important factor in the work-life balance of the employee.

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The Evolution of the Psychological Contract Theory

The precursors of the psychological contract theory can be traced back to the social exchange theories of the earlier decades. According to the social exchange theories, social relationships are made up of unstipulated obligations and the dissemination of uneven power resources between the employee and the employer. Argyris used the term ‘psychological work contract’ in his work titled ‘Organizational Behavior’ in 1960. This term was used to describe the entrenched perception and values held by the employer and the employee. The work of later authors refers to psychological contract as not only being dependent on the financial aspects but also on the social aspects. Psychological contract is not simply the work done for the salary and received obligations, but goes deeper and also covers such aspects as the responsibilities, privileges and rights of the employee.

What happens when the psychological contract is violated?

When psychological contract expectations are violated, the results could lead to problems in the organisation such as labour conflicts, discontent and disaffection. However, since psychological contract is not something that is negotiable, like salary increase, working hours and other work requirements, the employers have to take care to explore the psychological aspects of the problems too along with the other negotiable aspects.

How is psychological contract measured?

Psychological contract can be measured in various ways, usually by making use of questionnaires. The most common are the unilateral and bilateral methods. As the names imply, the unilateral method perceives psychological contract from the employee’s point of view and the expectations and obligations the employee believes due from the employer. The bilateral method of measuring psychological contract includes both the perspectives: of the employee as well as the employer. There are also other methods of measuring psychological contract such as the feature, content and evaluation measures.

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